> There is also a limited amount of it.

Do people trade gold 'still in the mountain'? I could start a market for gold still underground, effectively saying "you have purchased 1kg of gold, but to redeem, you have to pay $500 of mining costs".

Since there is a near unlimited supply of gold in the entire earth's crust, that could work to make a price ceiling on actual gold, which in turn would severely reduce its use as a reserve currency.